EBSA Seems to be Cracking Down on Multiemployer Plan
Service Provider Gifts

August 9, 2007 (PLANSPONSOR.com) - The International
Foundation of Employee Benefit Plans (IFEBP) has reported on
what appears to be stricter enforcement by some offices of
the Department of Labor's Employee Benefits Security
Administration (EBSA) of rules regarding service provider
gifts and entertainment for multiemployer plan trustees or
administrators.

In its announcement, IFEBP said some recent audits
and unofficial public statements by EBSA officials
indicated a strict application of the ERISA Section
406(b)(3) provision prohibiting a fiduciary from
receiving any consideration for his or her own personal
account from any party dealing with a plan in connection
with a transaction involving plan assets.

In what IFEBP speculates is a zero tolerance policy
on provider gifts, any gift or entertainment by a current
or prospective service provider for a multiemployer plan
for which the recipient serves as a trustee, was deemed
by EBSA to be prohibited.

According to IFEBP, the EBSA offices seem to be
extending the prohibition to any item of value regardless
of whether the amount is likely sufficient to persuade a
fiduciary in a transaction involving plan assets.

While many commentators on the subject of service
provider entertainment have suggested service providers
for a plan can pay expenses for trustees which could be
properly paid by the multiemployer plan, such as a meal
in conjunction with a Trustees’ meeting, IFEBP said
in some cases EBSA examiners have demanded trustees repay
the amount of any meal or entertainment provided by a
service provider plus 20% of that amount as a civil
penalty.

While the instances IFEBP has seen appear to be focused
on multiemployer plans, the rationale cited by EBSA offices
in prohibiting the provider gifts could extend to any
fiduciary of a plan covered by ERISA, the group said.